ZuoTi.Pro
Question

The Rustic Welt Company is proposing to replace its old welt-making machinery with more modern equipment. The new equipment c

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1
pessimistic expected optimistic
sales (millions welt) 74.29 -77.83 -84.91
manufacturing cost ($per welt) -105.14 -77.83 -64.18
life (Yrs) -64.53 -77.83 -87.55

As revenue/sales price is unknown, pv is negative for all

CONSIDERING CHANGE IN SALES

pessimistic expected optimistic
sales (millions welt) 2.1 2.2 2.4
manufacturing cost ($per welt) -5.7 -5.7 -5.7
total manufacturing cost (million$) -11.97 -12.54 -13.68
life 11 11 11
pv -74.29 -77.83 -84.91

CONSIDERING CHANGE IN MANUFACTURING COST

pessimistic expected optimistic
sales (millions welt) 2.2 2.2 2.2
manufacturing cost ($per welt) 7.7 5.7 4.7
total man cost (million$) -16.94 -12.54 -10.34
life 11 11 11
pv -105.14 -77.83 -64.18

CONSIDERING CHANGE IN LIFE OF MACHINERY

pessimistic expected optimistic
sales (millions welt) 2.2 2.2 2.2
manufacturing cost ($per welt) 5.7 5.7 5.7
total man cost (million$) -12.54 -12.54 -12.54
life 8 11 14
pv -64.53 -77.83 -87.55
0 0
Add a comment
Know the answer?
Add Answer to:
The Rustic Welt Company is proposing to replace its old welt-making machinery with more modern equipment....
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • he Rustic Welt Company is proposing to replace its old welt-making machinery with more modern equipment....

    he Rustic Welt Company is proposing to replace its old welt-making machinery with more modern equipment. The new equipment costs $10.4 million (the existing equipment has zero salvage value). The attraction of the new machinery is that it is expected to cut manufacturing costs from their current level of $9.40 a welt to $5.40. However, as the following table shows, there is some uncertainty about both the future sales and the performance of the new machinery: Pessimistic Expected Optimistic Sales...

  • I am having a hard time understanding the formula used to calculate the NPV. I see...

    I am having a hard time understanding the formula used to calculate the NPV. I see the answer, but can't back into the answer. I see the formula PV(rate,nper, pmt, (fv), [type]), for each of the NPV values, but I need help understanding what each number means. Thanks Problem statement below The RW Company is proposing to replace its old welt-making machinery with more modern equipment. The new equipment costs $9 million (the existing equipment has zero salvage value). The...

  • The RW, Inc. is proposing an investment in energy-saving equipment. The new equipment requires a $9...

    The RW, Inc. is proposing an investment in energy-saving equipment. The new equipment requires a $9 million investment. The attraction of the new equipment is that it would create an operating cost savings by cutting manufacturing costs. Currently, these costs are $8 per unit. However, as the following table shows, there is some uncertainty both about future sales and about the performance of the new machinery: Pessimistic Expected Optimistic Sales (Millions of Cost with new Economic life of new 0.4...

  • Victoria Energy are considering replacing their existing machinery with new, more efficient equipment. The old machinery...

    Victoria Energy are considering replacing their existing machinery with new, more efficient equipment. The old machinery was purchased 4 years ago for $15,000,000 and had an estimated useful life of 6 years; it can be sold today for $7,000,000. The new machine will cost $17,500,000 but will have a 10 year life and scrap value at the end of the 10 years of $4,000,000. The new machine will require shipping and installation costs of $300,000 and $100,000 respectively. As the...

  • Victoria Energy are considering replacing their existing machinery with new, more efficient equipment. The old machinery...

    Victoria Energy are considering replacing their existing machinery with new, more efficient equipment. The old machinery was purchased 4 years ago for $15,000,000 and had an estimated useful life of 6 years; it can be sold today for $6,000,000. The new machine will cost $17,500,000 but will have a 10 year life and scrap value at the end of the 10 years of $4,000,000. The new machine will require shipping and installation costs of $300,000 and $100,000 respectively. As the...

  • PC Shopping Network may upgrade its modern pool it lar t upgraded 2 years ago, when it spent $110...

    PC Shopping Network may upgrade its modern pool it lar t upgraded 2 years ago, when it spent $110 million on equipment with an assumed Me of 5 years and an assumed salvage value of $10 million for tax purposes. The firm uses straight-ine depreciation. The old equipment can be sold today for $80 million. A new modem pool can be installed today for $150 million. This will have a 3 year life and will be depreciated to rero using...

  • the company is considering the purchase of machinery and equipment to set up a line to...

    the company is considering the purchase of machinery and equipment to set up a line to produce a combination washer-dryer. They have given you the following information to analyze the project on a 5-year timeline: Initial cash outlay is $150,000, no residual value. Sales price is expected to be $2,250 per unit, with $595 per unit in labor expense and $795 per unit in materials. Direct fixed costs are estimated to run $20,750 per month. Cost of capital is 8%,...

  • Hit or Miss Sports is introducing a new product this year. If its see-at-night soccer balls...

    Hit or Miss Sports is introducing a new product this year. If its see-at-night soccer balls are a hit, the firm expects to be able to sell 51,000 units a year at a price of $69 each. If the new product is a bust, only 26,500 units can be sold at a price of $41. The variable cost of each ball is $25 and fixed costs are zero. The cost of the manufacturing equipment is $5.9 million, and the project...

  • The company is planning to acquire new equipment

    The company is planning to acquire new equipment for a cost of $38000. Management has already conducted and paid $15000 for a marketing survey while delivery and installation costs are expected to be $9000 and $7400 respectively. Financing costs are $3000 per year. The economic life of the investment in 5 years and the new equipment will depreciate straight-line to a zero value over 5 years. The management learn expects this new equipment at the end of 5 years at...

  • Acme Equipment Company is considering the development of a new machine that would be marketed to tire manufacturers. Res...

    Acme Equipment Company is considering the development of a new machine that would be marketed to tire manufacturers. Research and development costs for the project as expected to be about $4 million but could vary between $3 and $6 million. The market life for the product is estimated to be 3 to 8 years with all intervening possibilities being equally likely. The company thinks it will sell 250 units per year, but acknowledges that this figure could be as low...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT